Analisa Saham DOID | 8 Februari 2018

Analisa Saham DOID

Credit Suisse (CS)

DOID Initiate BUY TP 1760

● Initiating coverage on Delta Dunia Makmur (DOID) with
OUTPERFORM rating and target price of Rp1,760. DOID is the
holding company of Bukit Makmur Mandiri Utama (BUMA), which
is Indonesia’s second-largest coal mining contractor, after United
Tractors (UNTR)-owned Pamapersada Nusantara (PAMA).

● We believe that DOID is well-positioned to deliver strong
performance on the back of its strategic “tiered” pricing and
volume expansion by coal miners. Furthermore, DOID’s higher
operational and financial leverage than UNTR’s give it a higher
upside when coal price remains high.

● Our recent coal price revision translates into a more constructive
view on the sector. Overall, Indonesian coal production is
expected to be stable, but DOID’s customer base is expected to
increase production by 11%.

● Our Rp1,760 TP is derived from 5.0x 2018E EV/EBITDA, 20%
above its historical 7-year average of 4.15x, supported by, in our
view, a halving of its leverage and a significant improvement in
profitability. Key risks: coal price, unfavourable weather, strip ratio